American Bankers Association reports that banks believe their overtime exempt employees do not want overtime pay, as stated by Christeena Naser, Vice President and Sr Counsel. This opinion stems from the Department of Labor’s new interpretation of the Primary Duty Test. “The term “primary duty” means the principal, main, major or most important duty that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.” (DOL). ABA goes onto to state that the Test’s objective was to identify obvious non-exempt employees, but the new interpretation would seem to try to identify obvious exempt employees. The difference in nearly $27,000, or about 30 Million employees across all industries.

The Financial Crimes Enforcement Network (FinCEN) today announced a settlement with Desert Palace, Inc. d/b/a Caesars Palace where Caesars agreed to pay an $8 million civil money penalty for its willful and repeated violations of the Bank Secrecy Act. In addition, the casino agreed to conduct periodic external audits and independent testing of its anti-money laundering compliance program, report to FinCEN on mandated improvements, adopt a rigorous training regime, and engage in a “look-back” for suspicious transactions. – FinCEN

Big companies are some of the worst offenders in foreign corruption cases, but they are also increasingly policing themselves and self-reporting instances of bribery, new data show. The Organization for Economic Cooperation and Development analyzed 427 cases of foreign bribery in 17 countries to determine who’s bribing who, and how authorities are discovering corrupt practices. – Kathleen Caulderwood at International Business Times

FTC can sue companies for inadequate cyber-security protection, so says the United States Court of Appeals for the Third Circuit. – Dan Appleman at FCPA Blog

Caesar’s Palace to pay $8 Million penalty on poor compliance regime. FinCEN has also forced the Palace to take on additional action for boosting compliance an a lookback program to seek noncompliance in past transactions. “When it came to watching out for illicit activity, [Caesar’s Palace] allowed a blind spot in its compliance program,” says Jennifer Shasky, director at FinCEN.

“Whistle-blowers and insiders play an increasingly important role in our work,” says David Green, Director of the Serious Fraud Office in the UK. “I suggest… moving away from the identification principle of corporate criminal liability in English law and embracing something closer to vicarious liability, as in the USA,” he said in his speech at the 33rd Cambridge Economic Crime Symposium.

By performing an assessment of OFAC compliance programs and establishing a culture of compliance throughout the organization, a company can position itself to better understand and identify potential risk exposure. – Sven Stumbauer, Director in the Financial Crimes Compliance Practice at AlixPartners, LLP at International Banker

Opinion: FRB of Boston says Prepaid cards can be a savings tool, and I agree

credit Danny Choo

Prepaid cards from credit card companies have grown significantly in the past decade. They offer credit transactions to those who do not have the credit history to have credit cards. They offer a way to build credit for those who cannot even open a bank account. These are people and families who make $25,000 or less. If you are reading this, you are very likely a person with a bank account and a credit card. You might not know, but there are people who do not qualify to have a bank account. I was once such a person. But I wasn’t the norm of such a person. I had graduated from college and I didn’t yet have a job. During college, I had a college student checking out. I was moving back home 2,000 miles away from my bank. So, I needed a local bank. Wells Fargo said that I had overdrafted too many times and I do not have a history of income that would otherwise let them overlooking this. I was shocked. I didn’t know that banks refused to open checking accounts. Even more astonishing, this was at a time when checking account were not free. I went down the street to Key Bank, who opened an account for me. I got a job and Key Bank had my business for many years. But most people who do not qualify for checking account aren’t in my position. They have never made enough money to have any savings at all, which means even if they had a checking account, it would sit empty. Even having an account for someone open a bank up to various risks, which all have a cost. But financial institutions have come up with a solution: Prepaid Card. This uses the credit network for transactions but at no time transactions beyond the amount in the card can be made. And banks do not have to offer any services, keeping all of the information on the card. Actually, in Eastern Africa, the same type of decentralized banking system is growing through cellphones. And if you think about it a little longer, Bitcoin and other cyber-currencies are just another decentralized payment system, albeit with more value involved. What Prepaid Cards offer is not merely a way to make transactions. It can be method to store value, as economists would put it. That is, a person can save money in such cards. The difference for the user is minimal for the most part. Sure, it is less secure because if you lose it, you’ve lost all of your money, just like cash. But it is safer than cash since it is possible to have an account on that card, even though it wouldn’t have any of the protections of a checking account. At least, there would be a remote way to stop transactions on that card, if lost, unlike cash. For the financial system, prepaid cards balances cannot be used to lend money. But banks are not starved for money right now. The Federal Reserve is offering money below the inflation rate, which means, banks are being paid to just hold money. The card balance does not flow through the system until it is used for a transaction, but it a clear benefit to the consumer who cannot afford to be connected to the financial system through depository banking. For banks, it allows them to have a credit history on those people should they eventually want to join the financial system. The banks also make money on the credit transaction. And for the system as a whole, it reduces risks involving money laundering, fraud, theft and cyber crimes.

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Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is a member of ACAMS and ACFE.

Habib Soussou, Alfred Yekatom and Oumar Younous, as shown on the Recent Actions page of the Treasury Department.

Sanctioning individuals is relatively recent phenomenon. Up until several years ago, only nation-states received sanctions. And then individuals and specific business concerns started to be sanctioned. While the use of sanctions in this manner seemed tenuous at first, the success of sanctions against Russian President Vladimir Putin’s cronies solidified the practice and they are here to stay.

Who do you think should be taken off of the sanctions list? Why?

Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is a member of ACAMS and ACFE.

Assuming your bank performs transactions for people with international connections, Americans are barred from doing most types of transactions with Iran interests because of the economic sanctions. There are several sets of economic sanctions on Iran and only the the set that were implemented because of the nuclear activity were lifted. Practically, very little has changed for your bank, so, very little has changed for your compliance department.

Even, still, the elation alone is building interest in investment and trade activity with Iran. American entities with subsidiaries in Europe are likely to try to get around these sanction by claiming European sovereign rule. But this only works if the subsidiary can prove that it is not controlled by the American umbrella.

There’s no way to prove this. Just the fact that the subsidiary is a subsidiary and not a joint venture or minority interest deems it American jurisdiction on transactions because the net income is accounted for here in the States.

Minority interest is where things get tricky. If a client is doing business with an entity which has American minority interests and does business with Iran, then that’s territory that requires some legal analysis. The reason for the complication is even though there are many situations where Americans may have minority interests in European entities that will do business with Iran, one of those entities could be a fund that is specifically initiated to do that business. Wealth Americans have access to foreign markets without working through the American markets. It is possible that an American investor can buy into a Iran direct investment fund in London using his British assets. If he is able to do this, then he adds a legal entity layer. He will own a majority interest in an entity that is investing into a fund as a minority investor.

Your department will have to decide whether American jurisdiction applies to ownership of legal entities or if business will benefit the American.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.

On the surface, sanctions on individuals seem easy. Your bank is given a list, your bank looks through information about clients and stops all business with those who are on the list.

Hahaha, yeah, right. Then there are their related parties, some of whom you need to sanction as well because they can be intermediaries. Others you need to monitor because they are legitimate businesses but the individual has access to making transactions. Oh, and there are subsidiaries and parent companies of the monitored company. And then there are possible new agents for the individual, like an assistant. Then there are all of the accounts that have in some form or another put money into or taken money out of all of the related accounts. And then there are your bank’s vendors and suppliers, who all need to comb through their accounts so that they don’t do transaction through your bank. Correspondent account for foreign banks will also need to clamp down on transactions of suspiciously-related accounts. And then there are new accounts being created by any number of parties who might be providing transaction services for the sanctioned individual. And then there are those accounts that come from jurisdictions that do not enforce sanctions from other jurisdictions, from markets that do not allow reporting on account information, from banks with no physical presence…

You get the idea. The web of research required to identify all of the entities that require a decision on grows rapidly. Imagine doing this for a nation. To make this easier, Thomson Reuters has created a Russian Sanctions Tracking Service. This is supposed to help identify all related parties. Reuters is leveraging its own massage database.

This is good but no compliance department should rely on this. There is no way such information could be updated quickly. Hours, even minutes, matter. In today’s world where an account could be setup remotely online, an account could be created and start making transactions through it, completing all of the necessary transactions for the sanctioned individual before an update of the list is published.

Sanctions programs should have to work closely with the bank’s Fraud Investigation Units and Suspicious Activity Reporting groups to stay on top of the ever changing sanctions environment.

Natalia Polanskaya, Prosecutor General of Crimea

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is the author of the forthcoming book Money Laundering: How criminals got paid and got away.

Office of Foreign Assets Control has been highly effective. It has blocked $2.3 Billion worth of cash and property in the US, much of it Iranian.

credit Ropes & Gray

OFAC published its annual Terrorist Assets Report for 2014 and there are some interesting things in there. For example, it lists the top eight terrorists funds that were blocked. Al-Qaida is at the top. Because this report focuses on sanctions on terrorism and not other types of sanctions, Russia is not at the top.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is the author of the forthcoming book History of Money Laundering: How criminals got paid and got away.

In may of 2014, Office of Foreign Assets Control (OFAC) imposed sanctions on trade with Syria, including books and other works by Syrian authors. The sanction on Syrian authors include Syrian nationals in the United States. Pen American Center and other publishers and author groups opposed this move as an infringement on the First Amendment. Last week, OFAC amended the sanction to excluding trade involving publishing. This was a similar move made a decade ago when OFAC amended sanctions on Cuban, Iranian and Sudanese transactions “necessary and ordinarily incidental” to publishing and marketing written works from those regions.

Rosie Malek-Yonan, Assyrian Authoer

While OFAC’s amendment makes obvious sense, so does its pre-amended sanction. Trade involves money and the transactions of money in exchange for expression could lead to funding terrorism because “expression” could mean a whole lot of things. Even if trade didn’t involve money or things of monetary value, publishing could be a method of providing communication for terrorists. Of course, providing communication paths is not unique to publishing. Messages could be attached to invoices as well. And then there are the great number of communications devices and software available for free.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is the author of the forthcoming book History of Money Laundering: How criminals got paid and got away.

The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement organization of the U.S. government charged with planning and execution of economic and trade sanctions in support of U.S. national security and foreign policy objectives. Acting under Presidential national emergency powers, OFAC carries out its activities against problematic foreign states, organizations and individuals alike. – Wikipedia

Randall Park in The Interview via Historias Bastardas Extraordinarias

Historically, OFAC was dealing with sanctions on Iran, North Korea and Cuba, the usual suspects. But nowadays, OFAC also deals with individuals connected to Russian President Vladimir Putin and individual terrorists.

Making a career in this area of regulations involves great amount of interest in both financial crimes investigations and geopolitics. It also involves keeping up with information on what other regulatory bodies are doing, such as FinCEN, FINRA and Department of Homeland Security.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.